Darren R. KrattliEisenhower Carlson PLLC

Mechanics’ and Materialmen’s Liens: Start to FinishRCW 60.04

Main: (253) 572-4500Direct: (253) 620-25371201 Pacific Ave, Suite 1200Tacoma, Washington 98402

M&M Liens: What are they?

Contract Price = amount agreed upon by the contracting parties OR the customary and reasonable charge therefore

Construction Agent = a registered or licensed contractor, subcontractor, architect, engineer, or other person having charge of any improvement to real property, who is deemed the agent of the owner for the limited purpose of establishing liens under 60.04

Subject of lien = land improved and the improvement

Priority = as of commencement of work

RCW 60.040.21Any person furnishing:

• Labor,• Professional Services,• Materials,• or Equipment

for the improvement of real property shall have a lien upon the improvement for the contract price of the labor, services, materials, or equipment furnished at the insistence of the owner, or the agent or construction agent of the owner

M&M Liens: Notice Requirements

RCW 60.04.031Failure to comply = no lien

Prime Contractor = contractor who contracts directly with the owner or the owner’s agent, and assumes primary responsibility for the creation of an improvement

Basic Rule – must provide the owner notice in writing of the right to claim a lien

Prime Contractor – must also provide to the Prime Contractor if he complies with:

• RCW 19.27.095 (permitting)• RCW 60.04.230 (jobsite notice)• RCW 60.04.261 (permit posting)

M&M Liens: Notice Methods

RCW 60.04.031(1)

Form: RCW 60.04.031(4)

Timing – anytime, but only effective 60-days prior to sending (10 days if new SFR construction)

Method:• Certified or registered mail, or• Personal delivery, but need

proof (signed acceptance / affidavit of service)

M&M Liens: Notice Exceptions

RCW 60.04.031(2) and (3)

Prime Contractor Exception Notes:

• Non-visible = Professional services, and provision of materials or equipment

• Effective date – Notice to the owner is effective upon receipt (not retroactive)

• Lien limit – lien is limited to balance remaining due to the prime contractor

Exceptions:1) Deal directly with the owner /

common law agent (non contractor)

2) Labor only liens

3) Deal directly with the Prime Contractor – BUT if non-visible work on existing owner-occupied SFR, must notify owner

M&M Liens: Notice Exceptions

RCW 60.04.031(5)

Professional services = surveying, mapping, inspecting, testing, architectural, engineering, or other similar services

Professional Services:• No improvement visible – can record

notice

• If not recorded, lien is junior to other interested parties without actual notice of the services

Form – RCW 60.04.031(5)

M&M Liens: Claiming the Lien

RCW 60.04.071

Timing – by structure if residential improvement

Details required:• Claimant ID• Date work began/ended• ID of debtor• ID of owner• Property description

(address is OK, but COMPLETE legal description is best)

• Amount due (by parcel)

Timing = within 90 days of completion of work

• Work in furtherance of original contract can extend completion date (change orders, warranty claims)

• FILE EARLY – untimely is ineffective

Form = RCW 60.04.021(2)• Must be signed by the claimant or

someone authorized to act on his behalf

• Must state that the claim has been read

• Under penalty of perjury

Method = Record with county auditor

M&M Liens: Enforcement

RCW 60.04.141

RCW 60.04.181(3) – Only potential award of attorney’s fees, so be sure to include fee provision in contracts

Timing – Must commence action to foreclose within 8 months of recording

Venue – Superior court of relevant county

Foreclosure suit – similar to judicial mortgage foreclosure:

• Determine debt due• Determine lien priority• Sheriff’s sale• Excess proceeds go to junior liens

M&M Liens: Risks

RCW 60.04.071

RCW 60.04.081

Release – Must release lien upon payment and upon demand

Failure to release = attorney’s fees

and damages if delay is unjustified

Frivolous claim = lien claim made without reasonable cause OR excessive

Can result in attorney’s fee award

M&M Liens: Other issues

RCW 60.04.035

RCW60.04.121

RCW 60.04.151

RCW 60.04.221

RCW 60.04.161

Retaliation – threats to withhold future contracts made by a contractor to discourage lien filings = Consumer Protection Act Violation – attorney’s fees, treble damages, etc.

Assignable – You can sell your rights

Withholding:• Owner can deduct lien amounts from

payments to prime contractor• Notice to Lender – Can force lender to

withhold amount due from borrower in future loan draws

Bond – owner can bond around lien claim, forcing contractor to foreclose to receive recovery

Questions?